Between
the rise of value-conscious vacationers and an increasingly saturated market,
staying afloat in the vacation rental business has never been tougher. All too
often, fully featured rental properties are overshadowed by converted barns,
sheds, and garages that aren’t even better priced, leaving legitimate rental
business owners scratching their heads about what they should be doing to stay
profitable.
Fortunately,
optimizing your income is usually a matter of making several small, actionable
decisions. If you look at some of the biggest vacation rental businesses out
there, very few are doing anything extraordinary. Rather, the key to success in
most cases is to do the small things extraordinarily well. Let’s look at some
of the small but doable things you need to try to expand your rental business’s
profit margins:
1. Improve Your Multichannel Marketing
If you
haven’t integrated a channel manager for vacation rentals yet, do it
ASAP. The majority of bookings for most properties these days come from online
travel agencies (OTAs), and as such, effectively managing your listings on
these sites is one of the best ways to stay competitive.
With a
channel manager, it gets much easier to coordinate your property listings
across various OTAs. The best options on the market let you update information,
adjust pricing, and synchronize availability in moments, making it easier to
focus on other parts of your business. Best of all, these tools let you easily
collate property performance and other important data, allowing you to spot
wider trends and make more confident business decisions.
2. Build Your Own Direct Booking Sites
Though
you’re likely to derive the majority of your income from OTAs, it’s a good idea
to create and maintain a credible, well-optimized website for your rental
property brand with the help of a reliable
vacation
rental website builder. Provided
your websites are well-designed, direct booking sites are going to help your
properties’ credibility, which is great news for future rentals. More
importantly, you won’t have to pay commissions for bookings made through your
own sites, bringing the cost per rental down. Moreover, as long as your
websites are properly supported through content marketing, search engine
optimization, and targeted ads, the cost to keep them up is likely going to be
outweighed by the increased bookings and reduced commission expenses.
3. Automate Vacation Rental Tasks
Stop
relying on Excel spreadsheets for managing your properties and move on to
purpose-built property management software (PMS). The right PMS—one that
flawlessly integrates with a channel manager—can save you hundreds of hours and
thousands of dollars a month by centralizing key operations. With a good PMS,
you’ll avoid expensive input errors, stay on top of your guest communications,
and have more time available to make sure that your guests enjoy a great
experience.
4. Stay on Top of Your Pricing
Dynamic
pricing is the name of the game in the vacation rental industry. With so many
competitors out to get your lunch, you’ll want to keep your rates as attractive
as possible without undervaluing your services.
If you
only have one property, adjusting your prices manually isn’t that much of a
problem. Once you start managing multiple properties, however, the only
practical way to stay competitive is to use an AI-powered pricing solution. In
any case, avoid future problems by making sure your next dynamic pricing
solution integrates seamlessly with your other vacation rental software.
5. Consider Mid-Term Bookings
Accepting
mid-term bookings will help keep the lights on, especially during slower
seasons. This approach provides a steady source of income with fewer turnovers,
reducing associated cleaning and maintenance costs. Additionally, mid-term
bookings can attract long-term guests, establishing a valuable recurring
revenue stream and boosting your property's rankings on platforms like Airbnb
and Vrbo.
6. Establish Your Credibility
In most
cases, trust plays a bigger role than price in drawing renters in. Building
trust is often presented as an arcane art, but the truth is, like everything
else described so far, it’s often a matter of doing a lot of small things well.
Providing trustworthy direct booking services, encouraging renter reviews,
posting high-resolution photos of property amenities, and making things right
when you mess up are all doable ways of increasing your credibility and profit
margins over time.
7. Be Wary of Common "Money Leaks" in Vacation
Rentals
Plugging
money leaks in your utilities, maintenance, and other operational expenses can
increase your profit margins. Knowing these benefits, you should aim to do
regular audits of your properties and use data from your PMS software to
quickly identify potential areas for savings.
9. Keep Your Properties Attractive
Invest in
the aesthetic appeal of your vacation rental to attract more guests and command
higher rates. Regularly update decor, furnishings, and amenities to keep your
property fresh and inviting. Pay attention to guest feedback and make
improvements based on their suggestions. An attractive property not only boosts
bookings but also encourages repeat business and positive reviews.
The Secret Sauce of Profitable Vacation Rentals
Success
in the vacation rental business is invariably a cumulative result of attention
to detail, flexibility, and credibility. Regardless of the size of your
operation, sticking to these three key principles will help improve your cash
flow, all while strengthening your vacation rental property’s reputation. Given
that, these principles can be considered critical for long-term success in a
fickle and increasingly crowded industry.